Thursday, 20 January 2011

Grow Scotland's economy, or cripple it?

As a lowly member of the public rather than a politician, businessman or (so-called) expert, I remain unconvinced either way about the various arguments for and against fiscal autonomy.

Pragmatism rather than dry theory is probably more instructive. Thus those in favour of greater financial powers for Scotland are advocating lower corporation tax, VAT and fuel duty to stimulate growth, while the tartan tax debacle and the council tax freeze demonstrate that some politicians are unwilling to raise other taxes. At the same time they are offering various costly policies such as free medical prescriptions and heavily subsidised further education.

Therefore perhaps the key is in borrowing powers, yet we all know what happened to economies as varied as the G8's UK and the small independent state of Ireland when rapid growth is fuelled by public sector debt. The whole creaking edifice eventually comes tumbling down when the reality dawns that boom is still followed by bust. Likewise, what does this say about academic theories regarding fiscal accountability?

Indeed, Scotland has enjoyed its fair share of debt-fuelled growth based to a large extent on public spending, but the long-term effects of this are arguably detrimental rather than beneficial to the nation's wealth.

Moreover, the devolution experiment thus far inspires little confidence. An addiction to spending to the benefit of their subsidy-junkie cronies seems to represent the zeitgeist of Holyrood's denizens, with those promoting financial autonomy to encourage "fiscal responsibility" surely employing an oxymoron.

Neither do I find convincing abstract and emotional arguments about ideas like "personal honour and self-respect", not to mention the concomitant "shameful" notion of being "governed by another country".

Personally I couldn't care less who runs the country, but none of our current tiers of government - local authorities, Holyrood, Westminster and Brussels - inspire much in the way of confidence.

Indeed, isn't it ironic that many of those currently promoting the soundbite of greater financial powers for Holyrood to "grow Scotland's economy" are the selfsame people advocating ceding monetary policy to Frankfurt via the euro, a move which has helped cripple the economies of several member states?

On the other hand, things have perhaps gone a bit quiet as regards that particular Holy Grail.

(Published slightly abridged and edited as a letter in today's Scotsman.)

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